Nation shifts to Iranian tankers to keep oil flowing: sources

Chinese buyers of Iranian oil are starting to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all of their imports to keep supply flowing amid the re-imposition of economic sanctions by the US.

The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the sanctions, which were put back after the US withdrew in May from a 2015 agreement to halt Iran’s nuclear program.

The US is trying to halt Iranian oil exports to force the country to negotiate a new nuclear agreement and to curb its influence in the Middle East. China said it is opposed to any unilateral sanctions and has defended its commercial ties with Iran.

The first round of sanctions, which included rules cutting off Iran and any businesses that trade with the country from the US financial system, went into effect on August 7. A ban on Iranian oil purchases will start in November. Insurers, which are mainly US or European based, have already begun winding down their Iranian businesses to comply with the sanctions.

To safeguard their supplies, State oil trader Zhuhai Zhenrong Corp and Sinopec Group, Asia’s biggest refiner, have activated a clause in their longterm supply agreements with National Iranian Oil Corp (NIOC) that allows them to use NITC-operated tankers, according to four sources with direct knowledge of the matter.

They spoke on condition of anonymity as they were not allowed to speak publicly about commercial deals.

In July, all 17 tankers chartered to carry oil from Iran to China were operated by NITC, according to Reuters. In June, eight of 19 vessels chartered were Chinese operated.

In 2017, China imported an average of 623,000 barrels per day to fire up its economy.